What’s measured The report identified the number of registered 501(c)(3) public charities in the region, including those that have filed an Internal Revenue Service (IRS) Form 990, for the years 2004 through 2007, using data from the National Center for Charitable Studies. Data prior to 2004 were unavailable. U.S. Census population estimates were used to calculate the per 1,000 population indicators. Public charities designated as 501(c)(3) organizations under the Internal Revenue Code are exempt from federal income taxes because they are operated solely for religious, charitable, scientific, public safety (testing), literary or educational purposes; amateur sports competition or for the prevention of cruelty to children or animals. Such organizations with more than $25,000 in income are required to file an annual Form 990 with the IRS to provide information on their mission, program and finances. 501(c)(3) public charities are different from 501(c)(3) private foundations in that public charities are primarily supported by the general public (and sometimes the government) and therefore have different filing requirements than private foundations. Private foundations typically receive contributions from a single source such as an individual, family or corporation, and face stricter reporting requirements than other 501(c)(3) organizations. This indicator tracked registered public charities, comparing those that filed a Form 990 and those that did not. Why it’s measured Public charities provide opportunities for residents to contribute both their time and money to support causes they are passionate about, improving the quality of life of their communities. A ratio of 501(c)(3) public charities to population suggests higher levels of civic engagement. The number of such organizations required to file Form 990 gives some insight into the relative scale of operation of the region’s public charities and the mix of large versus small public charities. Indicator results In 2007, the region was home to 5,967 public charities (2.5 per 1,000 residents), 2,115 of which filed Form 990 (0.9 per 1,000 residents). From 2004 through 2007, the number of public charities rose from 5,487, but the number of public charities filing Form 990 fell from 2,412. The ratio of public charities to population has remained fairly stable for the time period. Mecklenburg County had the highest ratio of public charities, at 3.0 per 1,000 residents, while Stanly, Cabarrus and Rowan counties also had relatively high public charity ratios at 2.7, 2.5 and 2.5 charities per 1,000 residents, respectively. Union County — at 1.7 charities per 1,000 residents — had the lowest ratio of public charities to population. At 2.5 public charities per 1,000 residents, the region had a lower ration of public to population than either North Carolina (2.9 per 1,000 residents) or South Carolina (3.3 per 1,000) as a whole. From 2004 through 2007, the public charities ratios increased slightly in both North and South Carolina, while the ratio for the region stayed about the same. Evaluation An obvious question arises in looking at both the gap in actual numbers and the diverging trend lines between the number of registered public charities and those filing Form 990. As the number of charities in the region grew between 2004 and 2007, the number of charities filing Form 990 decreased, to the point that by 2007 nearly two-thirds of the region’s registered public charities had not filed Form 990. This disparity could indicate that the growth in the number of registered public charities in the region has been fueled by smaller, grassroots organizations with income of $25,000 or less (thereby excluding them from the filing requirement). If so, this would be an important measure of growing civic engagement through the nonprofit sector. Alternatively, the diverging numbers could reflect a growing number of “inactive” public charities or the merging of organizations. Further analysis of this issue is needed. Looking at the ratio to population, Mecklenburg County leads the region in the number of public charities per 1,000 residents. Rather than indicating a greater level of civic engagement in Mecklenburg relative to the other counties, this figure may just reflect that many nonprofit organizations with a regional focus are based in Charlotte because of its central location. Stanly County’s regional rank of second in public charities ratio to population is an interesting number given the county’s location on the region’s periphery, and is perhaps an important measure of that county’s level of civic engagement. The region’s lagging numbers relative to state averages in North and South Carolina may reflect a greater concentration elsewhere of nonprofit organizations with a statewide focus, such as in the state capitals of Raleigh and Columbia. This question needs to be explored further to determine how the region actually compares to other regions in the Carolinas. Another question that should be explored further is whether the lower regional numbers relative to the state average reflect a different model of nonprofit organization, with fewer nonprofit organizations doing more of the work (i.e. a preference in the region for larger, consolidated operations in the nonprofit sector rather than smaller, grassroots efforts). The answer to this question may be related to the earlier one about why so few public charities in the region are reporting Form 990 relative to the total number of registered public charities. Connections The number of registered public charities will be an important benchmark to track over time with other quality-of-life indicators, especially those related to social well-being, the arts, the environment, health and education. One would expect that as regional needs grow in these areas, there would be a corresponding demand for public charities to help address those needs, especially in the absence of adequate government support.
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